What Is a Modular Home—and Is It Worth Buying One?

This type of alternative home might be an affordable option for people in a competitive home market. Here’s what you should know before you buy one.

If you’re looking to buy a house, some of the most affordable prices in your area may be for modular homes. But what is a modular home? Modular homes aren’t mobile homes—they don’t move—but are often located alongside mobile homes in mobile home parks and similar developments. If you’re on the fence about this style of build, learning about the key features will help you decide if a modular home is right for you.

What Is a Modular Home, Exactly?

A modular home is a prefabricated (also known as prefab) structure that is built off-site and assembled on-site. They sit on the slab or foundation where they’re pieced together. Modular homes are very similar to manufactured homes, except (among other differences) they’re built to different codes.

“Modular homes are built in sections in a climate-controlled factory and transported to your land, where a builder assembles the home like building blocks on top of a permanent foundation,” says Bailey Carson, a home care expert at home services finder Angi. “Modular homes are one form of prefab home, but their key differentiator is that, unlike manufactured and mobile homes, modular homes are built on foundations.”

Modular homes are different than RVs and mobile homes, too.

“RVs are mobile, meaning they aren’t constructed on a foundation like a modular home. RVs are meant to move around. Some people live in them full time while others use them for recreational, short-term use,” Carson says. “If you’re living in an RV full time, you typically purchase an RV and rent a space in an RV or trailer park, but you don’t need to own the land where it’s parked.”

With a modular home, you own the land it is built on the way you would own the land a typical single-family home sits on. And like single-family homes, the value of modular homes appreciates over time.

You might hear modular homes compared to stick-built homes, which are homes built on-site. Modular homes are assembled on-site, but the actual construction of the structure itself takes place off-site.

Another feature that sets modular homes apart is building codes. Modular homes follow local, state, and regional building codes for stick-built homes. Manufactured homes, on the other hand, follow the federal HUD (Department of Housing and Urban Development) code.

What is a Modular Home’s Pros and Cons?

Carson says the building method for modular homes makes them more energy efficient than stick-built homes in many cases. “Since modular homes have to make the rough journey to your construction site, they are usually built with tighter seams and tighter construction than some stick-built structures. Sealed construction means lower heating and cooling bills, which makes modular homes extremely energy efficient,” she says.

Kristina Morales, Realtor at eXp Realty, says part of that building process means the homes aren’t exposed to the elements while under construction.

“With a stick-build home, someone’s going to come in, they’re going to frame out your house over a year,” she says. “However, when it’s raining, that foundation is getting all of this moisture. With a modular home, it’s pretty much never been exposed to the elements.”

A potential downside of these alternative homes is that, because these homes are built in factories, they’re not as customizable as traditional new builds when it comes to the floor plan. You’ll have a handful to choose from, depending on each builder. Still, customizing the interiors is easy, Morales says.

The biggest pro is that modular homes are far more affordable than stick-built homes.

On average, building a modular home will be $100 to $200 per square foot, plus the cost of land and fees (including building permits). A 1,800-square-foot modular home will typically cost between $180,000 and $360,000, while the cost to build a custom home runs from $350,000 to more than $1 million. Of course, prices will vary depending on the types of custom details and finishes you choose.

One important thing to consider is that, due to zoning, these homes are not possible everywhere.

“While there are many perks to owning a modular home, there are a few drawbacks,” Carson says. “For example, finding land that’s zoned for prefab homes in an area where you want to live can be challenging, especially in today’s real estate market.”

Beatrice de Jong, broker and consumer trends expert at Opendoor, a home-buying service, points out that while modular and manufactured homes sometimes have a negative connotation, they are often built to last as long as stick-built homes.

“They’re typically made with less expensive materials, but that doesn’t necessarily mean lower quality,” she says.

What is a modular home’s ideal location? If you’re in Florida, where hurricanes are common, a modular home might not make as much sense as a concrete block single-family residence. But if your area experiences relatively moderate weather, you may be okay with a money-saving modular home.

What Is a Modular Home’s Resale Potential?

Modular homes appreciate in value, so you should see a return on your investment in the right market. However, like other types of specialty builds, you’ll have to find the right buyer when it comes time to sell.

“Modular homes are popular in senior living communities thanks to their affordability and energy efficiency,” Carson says. “Residents can enjoy the comforts of their own home while benefiting from the community amenities and care found in traditional senior living facilities. In recent years, there has been increasing popularity amongst homeowners of all ages, especially in markets experiencing housing shortages or higher home prices.”

And given their affordable price point, modular homes make good starter homes, too.

This article was written by Kristine Gill from Better Homes and Gardens and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to [email protected].